With the offer of more taxation powers, the phoney war in Scotland is over

Scottish politics are getting very murky indeed. First, the UK government suddenly rushes out a White Paper about awarding Holyrood extra taxation and other powers along the line of the Calman report ( extract below the fold). In principle this was agreed by all pro unionist parties in Westminster and Holyrood. But there are two catches. First Cameron’s Conservatives refused at the last minute to go along with the Labour proposals for obvious political reasons, although George Osborne pledged in the Scotsman to produce similar Tory plans if/when in government. Catch 2: Labour’s Scottish borrowing powers would be limited by the amount Holyrood could raise in extra taxation i.e the borrowing would have to be fully funded. The aim is to make Scots responsible for the extra cost of things like no uni fees and free health care for the elderly and stop them trying to blame London for the shortfall. Nats and others would say this places an extra burden on the Scottish taxpayer that other UK taxpayers would not bear. Although this isn’t yet acknowledged, the plan puts in question the whole house of cards that is the Barnett formula for regional spending. But there’s a far more urgent point. Who in their right mind would want to take on separate Scottish taxes when they don’t know what the UK burden will be, other than higher than today? No deal is expected until 2012 at the earliest so the theme will be the counterattraction to independence, and will occupy what had been up to now a clear field for the SNP.

The low politics of the move is that it’s a spoiler against the SNP minority government’s own White Paper outlining an independence strategy on Monday, St Andrew’s Day. There’s a catch here too. The SNP paper will not contain the wording of an independence referendum question – or questions. Finally, the unionist parties in Holyrood refuse to back SNP plans to set a low limit on the price of drink for all sorts of reasons, most of them involving a game of political poker. The SNP insist they have to so it this way because they don’t set the duties on alcohol. Westminster does, and will continue to do so. Who ever said devolution was easy, even without a Troubles legacy?

From the Herald report
Under the plan, the UK income tax rate would be cut by 10p in Scotland with a corresponding cut in the annual block grant from the Treasury. To maintain
the current budget of £30 billion, Holyrood would have to impose a new Scottish income tax at 10p. This would give it about £4.5bn in spending power. If it wanted more money it could raise this level; a cut would reduce its income.
As well as pledging to transfer other taxes like stamp duty, the Government also backed giving Edinburgh capital borrowing powers – but with serious strings attached.
The Treasury would set the limits while taking into account local council borrowing. Moreover, any borrowing would be financed by “increasing taxation in Scotland above the level of the rest of the UK”, ie, through the new Scottish income tax. “There is no borrowing free lunch,” one Whitehall source noted.

  • Dewi

    And no referendum on Calman – astonishing nonsense from the unionists – if you want to spoil at least try at do it in style…..pathetic.

  • barnshee

    Scotland like N Ireland Wales NW England NE England and SW England do not generate sufficient tax revenue to pay for the services they consume .

    This is England shafting the scot nats. Essentially its giving the scots the opportunity to stand on their own feet (or calling their bluff) Fuck off and raise you taxes -see how far that gets you

  • Forgive me for being obtuse:

    1. Why is it “murky” politics for Westminster politicos to steal a march on the SNP’s scheduled ta-ra-rahs? To me that’s the normal run of the game.

    2. Even I feel a whit of sympathetic recognition of the Tories playing hard-ball, within six months of the Westminster election. Why should Osborne be muscled into commitments here and now? Heaven knows his Party have already painted themselves into tight financial corners on other matters: those Corporation Tax cuts, messing with NICs, … and that’s only this week! For the immediate future, the Tory intention has to be to answer all thorny questions with the “wait and see until next summer” approach. And why not?

    3. The essence of the Herald story, which seems to be Brian Walker’s point-of-departure here, was a shrill scream by the Scottish LibDems. No more, no less. Now, c’mon: cut them a bit of slack — the poor dears have had a tough time of late. And, with that YouGov poll the Telegraph reported (last Monday?), their future is neither bright nor golden.

    4. Of course there can be only one outcome from Calman: increased tax-raising powers, but no open-ended subsidies. That’s not just true for the Scots: it’s a principle that must apply to all government below the Westminster tier. The balance of funding between Westminster and any other authority was grossly distorted by the Thatcher Poll Tax, and made worse by Heseltine’s wheeze of putting the excess on VAT. We have not been able to move on from there. When the Tories put up the “easyJet model” (a.k.a. the Barnet — no, I don’t mean Barnett — approach) for local government finance, they at least are being honest. Localised funding for locally-determined commitments, anything in excess of nationally-mandated and nationally-provided norms, is the only way of ensuring local choice and local independence.

    5. If it all depends on the price of drink, mine’s a treble. Preferably in a bar in Berwick or Carlisle. Unless one wants booze-shacks and shebeens all along the Border, and to re-enact the Newry tail-backs on the A1 and A74 each and every weekend.

  • Now for the low blow:

    6. Salmond & Co need to play it very cannily. The “S” word is, presently, raising many ‘umble Anglo and Saxon hackles (and even so among the never-‘umble Celts).

    Why? Well, it’s that significant, and expensive letter in such things as “RBS” and “HBOS”.

  • Johnny B Good

    Interestingly, Calman and the White Paper are also suggesting taking powers away from Holyrood.

    There’s been very little commentary on this aspect.

  • Prionsa Eoghann

    Brian

    You conveniently forget to mention the most pertinant fact. Calman’s proposals does not have any opposition in Scotland……………..well in the last few days the Tories(no doubt on orders from a foreign Capital city) have began to posture. Jim Murphy can say anything he wants, promise us all our own pink themed elephant parks, a million quid each even. Since there is no plans to legislate on those plans before the election and as much chance as any of them happening under Labour.

    Quite poor stuff Brian.

    Barnshee @ 12:01 AM

    Shouldn’t you know something about a topic before trooping out long disproved myths? It just makes you look silly.

    Regarding tax-raising powers, it is all getting silly now. The lenghts that the Unionists are going to stop the inevitable are farcical. And Malcolm is quite correct in many matters, but absolutely spot on over the Lib-Dem’s a totally irrellevant and discredited entity in Scotland. Simple stuff, should the British and their hired Jocks continue to put blocks in our path at least give us full fiscal autonomy. let us take responsibility for our own money and how we spend it.

  • Since this seems to be the only thread open which is even distantly related, may I go ever-so-off-topic to point out that the Other TaxPayers’ Alliance is a year old?

    Anyone unclear which is the more socially-acceptable operation, the one whose name might be mentioned in decent company, might usefully consult he downloadable .pdf.